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Transforming business with EDI Electronic Data Interchange has transformed the way enterprises conduct business across the globe. It has reduced paperwork and facilitated instant document availability anytime and anywhere across the world. Dominic K reports
CIOs like Anwer Bagdadi, Chief Technology Officer, CFC International are of the view that EDI deployments help reduce the flow of hardcopy documents. “It enables faster decision-making as EDI workflow processes add intelligence to application software based on pre-defined parameters. These processes help in comparatively faster large-scale purchasing and scaling-up of operations, and offer multi-level checking and validation which are of prime importance in BFSI, legal, healthcare and e-procurement (for manufacturing companies).” Currently, EDI is predominantly used for applications such as inventory and logistics management, transport and distribution, administration, and cash management. EDI-based solutions require minimal human intervention as most processes are automated. Without EDI technology, exchanging documents, even electronic ones, would have been a manual task thanks to incompatibilities in application and database formats. To overcome these problems EDI specifies a standard format for each type of business document. These EDI standards are developed under the auspices of standards development organisations (e.g. ISO) and bodies like Accredited Standards Committee (ASC).
The benefits of deploying EDI include reduced paperwork, fewer errors in transcription, faster response time for procurement and customer needs, reduced inventory requirements, and timely payment of vendors. The basic motive behind standardisation is to ease EDI by adopting common standards that allow for automated message processing. Standardisation of message formats using a common syntax makes it possible for computers at both ends to assemble, disassemble and process messages. The goal is to migrate to a universal family of EDI standards to improve governmental and private sector efficiency. This will also minimise EDI deployment and implementation costs by preventing duplication of effort.
Multiple standards
Enterprises and government organisations currently use multiple EDI standards. Some standards include ASC X12, EDIFACT (Electronic Data Interchange For Administration, Commerce and Transport), HL7 and NCPDP (National Council for Prescription Drug Programs). All of these were developed by one or more organisation, a different group in each case. ASC12 defined the ASC X12-based standards for electronic interchange of data across the network. NCPDP handles the pharmaceutical and healthcare industry. EDIFACT was developed by the United Nations. This was later adopted by the International Organisation for Standardisation (ISO). The current ISO standard for EDI is defined using ISO 9735. Ramendra Mandal, Country Manager (Sales & Marketing), Informatica, estimates that data in office applications like e-mail, Word documents, presentation slides and spreadsheets, and industry-specific standards such as Society for Worldwide Interbank Financial Telecommunication (SWIFT) account for as much as 80 percent of the information flowing through, from and to today’s enterprises. “EDI solutions should offer integration of all enterprise data (structured, semi-structured as well as unstructured), and map them to the enterprise IT infrastructure.”
Inside the EDI process
EDI is all about mapping and pre-defining data flows and routes. Once the workflow is defined, processes can be automated with minimal human intervention. The electronic replication has the same look and feel as the original paper document it replaces. “Organisations exchanging standard EDI documents require software to map their internal application formats and those specified by EDI standards,” notes Arun Ramachandran, Head, Pre-sales and Professional Services, Sybase India and SAARC. To send an EDI document to a business partner, an organisation has to execute an outbound map that translates from its internal format to an EDI one. The resultant message or file is then transmitted to the trading partner over the Net. At the trading partner, an inbound map is performed to translate the message from the standard EDI format to that of the partner’s internal application or database format. This translated document can be accessed according to the document access policies defined by the sender. For example, if the sender has granted a document with only read access, the recipient will only be able to read the document and will not be able to modify it. The infrastructure needed for deploying EDI applications depends on the individual enterprise. If the application is an important one then it is advisable to deploy a dedicated EDI server. Otherwise, the application can run alongside others on the same application server(s).
‘E’ is for expanding data horizon Mandal points out that deploying an EDI solution helps expand the visibility horizon of data within an organisation. “The solution will also help increase human resource and overall productivity since processes can be completed faster. It facilitates regulatory compliance and results in a drastic reduction in maintaining paper files.” EDI helps do away with data redundancy, leading to fewer errors, less time wasted on exception-handling, and a more streamlined business process. It offers the prospect of easy and cheap communication of structured information between government entities and their extended ecosystem of suppliers and clients. As Ramachandran states, “EDI can be used to automate existing processes and rationalise procedures, thereby reducing costs and improving the speed and quality of services. Since EDI necessarily involves business partners, it can be used as a catalyst for greater efficiency across organisational boundaries.” Based on the advantages that EDI offers, the Indian Customs and Central Excise department has initiated various EDI interfaces to help Customs House Agents, Carry & Forward Agents, importers and exporters. The Indian Customs EDI System (ICES) will help these entities prepare shipping bills and bill of entry declarations in the format acceptable to the ICES for submission at the Customs House through the ICEGATE (Indian Customs and Excise Gateway) portal at icegate.gov.in. According to A K Prasad, Commissioner of Customs, the ICES set-up is developed to provide a flexible and reliable framework to facilitate the secure electronic exchange of messages between customs and its various EDI partners. “The gateway project will allow importers and exporters to file declarations from their offices to any custom house covered by ICES through a Web-based interface,” he informs. On the flip side, one of the biggest disadvantages of EDI is that it requires organisations to build on their existing set-up and processes. Employees also need to be trained and familiarised with the system. The initial outlay and the time that needs to be invested in an EDI implementation in terms of customisation and training can prove discouraging unless it is factored-in from the start.
Tomorrow’s EDI Electronic commerce on the Internet is a multi-billion-dollar industry. This will only expand as bandwidth costs drop. X12 standards have increased EDI’s compatibility with multiple Internet protocols. Do the math and it becomes apparent that EDI is poised to play a dominant role in online commerce of the B2B variety, especially in the case of large enterprises. |
Today’s
businesses bank on efficient information exchange in the form of paper documents
both within and outside an organisation’s boundaries. These documents range
from purchase orders (e-procurement), spreadsheets and other office documents,
to engineering drawings or any other documents that might be exchanged between
business partners. The process of exchanging these documents can be quite cumbersome
if they’re on paper. This is where Electronic Data Interchange (EDI) technology
steps up to the plate and facilitates the electronic exchange of business documents.
